what is redundancy

Are you worried about redundancy and redundancy entitlements in Ireland?

Do you need to access a redundancy calculator to check what you can expect?

Hopefully this comprehensive article will help give you a good, sound understanding of redundancy in Ireland, redundancy payments, notice periods and your employment rights in Ireland.

Non-collective redundancies in Ireland

An employer’s obligations in redundancy situations will depend on whether a collective redundancy is proposed or it is a “normal” redundancy in a small business in Ireland. The focus of this piece is non-collective redundancies; in collective redundancies there will be additional requirements on the employer imposed by the Protection of Employment Acts 1977 to 2007 and various regulations and other legislation.

In non-collective redundancies in Ireland there are no specific procedural requirements set out to carry out a redundancy dismissal.

What the employer must be very aware of though is the Unfair Dismissals (Amendment) Act, 1993 as this act holds that if the conduct of the employer is unreasonable in carrying out a redundancy then it may amount to unfair dismissal.

So it is vital that the employer act reasonably in carrying out a redundancy and a principal factor in how reasonable the behaviour was will be how the employer selected the employee(s) for redundancy and whether there were other alternatives to redundancy such as alternative employment or some other type of work in the employer’s business.

From an employer’s perspective it is important to be able to point to the reasonableness of his conduct when faced with the necessity for redundancy.

Even though it is not a procedural requirement from a legal perspective it is good practice for the employer to hold meetings and discussions to explore any alternatives and it would be prudent for the employer to make a record of these discussions and proposals

The ability of the employer to be able to point to a paper trail of how the decision to carry out redundancies was arrived at can prove invaluable at a later date, for example at an EAT or Rights Commissioner hearing.

The key point for an employer is to be able to demonstrate that people were selected fairly for necessary redundancies and that the employer acted reasonably at all stages of the process.

The selection of employees for redundancy has led to many employers paying quite a high price at a later date before the Employment Appeals Tribunal and unfortunately there are no criteria laid down in legislation for the selection of employees.

Some factors to be considered by the employer should include

Attendance record

Ability

Disciplinary record

Skill level

Many employers employ a policy of “last in, first out”. If there is a procedure in place in the workplace to deal with redundancy, as there is with most unionised workplaces, the employer will have to be able to show that the procedure was used to select each employee made redundant.

Nevertheless, no matter what criteria are used, the employer may well have to stand over his/her selection procedures at a later date and being able to objectively justify his choice will be his best defence.

It is worth noting also that the idea of “impersonality” should run through any redundancy decision-this means that the person is not redundant but it is actually the job that is deemed to be redundant-this may be due to change in the workplace or a downturn in business.

Redundancy Calculator Ireland

Calculating your redundancy entitlements is pretty straightforward with the redundancy calculator provided online by the Department of Social Protection.(See link at the end of this article)

What is redundancy?

The legal definition of redundancy in Ireland is set out in the Redundancy Payments Act 1967 and amended by the Redundancy Payments Act 1971 and 2003-

an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to—

(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or

(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or

(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or

(e) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

Key factors in redundancy

There are two critical factors to be gleaned from this definition-

The redundancy should arise from the doing away with the job, not the person. This feature of impersonality is necessary in a genuine redundancy situation.

Change-the change must arise as a result of change in the workplace which might range from a closing down of the business to a simple reduction in number of employees.

Redundancy entitlements

To be entitled to a redundancy payment you must have the requisite period of service served which is:

104 weeks of continuous employment attained after the age of 16 years.

To be entitled to redundancy you will need to have been dismissed from your job; if you are given a new contract of employment or your old contract is renewed you will not be entitled to redundancy.

Short time/lay offs

You can be placed on short time or laid off where the employer is unable to provide work but only where the employer reasonably believes that the lay off will not be permanent.

The employer is generally obliged to pay the employed during this time although there are exceptions to this general rule depending on custom and practice in specific situations.

Redundancy payments

Redundancy payment entitlements are calculated by reference to weeks per year of service and is basically calculated as follows:

2 weeks’ pay for each year of continuous employment over the age of 16 years

An additional one week’s normal earnings.

All earnings over €600 per week are disregarded though in calculating statutory redundancy payments and redundancy payments are tax free.

(Continuous employment is not broken by layoffs, holidays or sickness.)

Redundancy calculator

You can access a redundancy calculator on the website of the Department of Social Protection to calculate your redundancy entitlements. Click here to go to calculator.